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Policymakers, civil society groups, aid donors, andscholars around the world increasingly agree thatgood governance matters for development. This growing

consensus has emerged from a proliferation of empirical

measures of institutional quality, governance, and the

investment climate, and accompanying research showing

the strong development impact of good governance. For

over a decade the Worldwide Governance Indicators(WGI) have been instrumental in enabling such research,

fostering debate and discussion, and raising awareness

about governance issues in the development community

and beyond. This is the eighth installment of the

Governance Matters research paper series.

The WGI capture six dimensions of governance for

more than 200 countries and territories between 1996

and 2008. They organize and synthesize data reflecting

the views of thousands of stakeholders worldwide,

including respondents to household and firm sur veys,

and experts from nongovernmental organizations,

public sector agencies, and providers of commercial

business information. The latest update of the WGI is

based on 35 data sources from 33 organizations around

the world (see box on reverse).

The six aggregate measures and their underlying source

data are available at www.govindicators.org, making the

WGI one of the largest compilations of cross-country

data on governance publicly available.

The WGI are a valuable tool for assessing cross-country

differences and changes in country performance over

time on key dimensions of governance. But simplylooking at differences in governance scores is often

insufficient, since some changes may be too small

to be meaningful. To make these comparisons more

informative, and to avoid a false sense of precision about small dif ferences between countries, the WGI provide

margins of error with every country score. These margins of error (depicted in Figure on reverse) indicate the

likely range of scores for each country. Although such imprecision is present in all attempts to measure governance,

it is rarely acknowledged explicitly as it is in the WGI. Thanks to improvements over time in the WGI, such

margins of error have declined, and, even though they remain non-trivial, they are significantly less than the

imprecision in any individual indicator of governance.

Governance Matters 2009

institutions by which authority in a country is exercised. Thisincludes the process by which governments are selected, monit

and replaced; the capacity of the government to effectively formand implement sound policies; and the respect of citizens and thstate for the institutions that govern economic and social interact

1. Voice and Accountability: the extent to which a countrcitizens are able to participate in selecting their governmenas well as freedom of expression, freedom of association,and a free media.

2. Political Stability and Absence of Violence/Terroristhe likelihood that the government will be destabilized byunconstitutional or violent means, including terrorism.

3. Government Effectiveness: the quality of public servicethe capacity of the civil service and its independence frompolitical pressures; and the quality of policy formulation.

4. Regulatory Quality: the ability of the government to prosound policies and regulations that enable and promote privsector development.

5. Rule of Law: in and abide by the rules of society, including the quality ofcontract enforcement and property rights, the police, andthe courts, as well as the likelihood of crime and violence.

6. Control of Corruption: the extent to which public poweis exercised for private gain, including both petty and grandforms of corruption, as well as capture of the state byelites and private interests.

Six Key Dimensions of Governance

dataset at: www.govindicators.or

WORLDWIDE GOVERNANCE INDICATORS 19962008

THE DEVELOPMENT RESEARCH GROUP

RESEARCH AT THE WORLD BANK

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0

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CHANGES IN VOICE & ACCOUNTABILITY, 19982008

MajorDeterioration(selectedcountries)

Insignificant Change

(selected countries)

Major Improvement

(selected countries)

0

2

CHANGES IN RULE OF LAW , 19982008

Major Deterioration

(selected countries)

Insignificant Change

(selected countries)

Major Impro

(selected co

-2

BELARUS

ZIMBABWE

VENEZUELA

TURKMENISTAN

RUSSIA

ECUADOR

ELSALVADOR

ARGENTINA

UKRAINE

BRAZIL

PERU

LIBERIA

INDONESIA

GHANA

SIERRALEONE

ZIMBABWE

ERITREA

VENEZUELA

BOLIVIA

TURKMENISTAN

KAZAKHSTAN

MOZAMBIQUE

COLOMBIA

GHANA

LATVIA

ESTONIA

SERBIA

LIBERIA

Some Countries, but Deteriorations in Others

Data Sources for the WorldwideGovernance Indicators

Surveys of Households and Firms: Afrobarometer;AmericasBarometer; Business Environment and EnterprisePerformance Survey; Gallup World Poll; Global CompetitivenReport; Global Corruption Barometer; Latinobarometer; PolEconomic Risk Consultancy; World Competitiveness Yearboo

Commercial Business Information Providers: BusinessEnvironment Risk Intelligence; Cerberus Corporate IntelligenEconomist Intelligence Unit; Global Insight; iJET Country Secu

Ratings; Political Risk Services.

Nongovernmental Organizations: BertelsmannTransformation Index; Freedom House; Global E-GovernanceIndex; Global Integrity Index; Heritage Foundation; InternatioResearch and Exchanges Board; Reporters Without Borders;Open Budget Index.

Public Sector Organizations: African Development Bank,Asian Development Bank and World Bank Country Policy andInstitutional Assessments; Cingranelli-Richards Human RightsDatabase; European Bank for Reconstruction and Developme

Database; International Fund for Agricultural Development RSector Performance Assessments; OECD Development Cent

in Persons Report.

Many policymakers and civil society groups use the WGI to monitor performanceand advocate for governance reform. The WGI are also used by aid donors

who recognize that the quality of governance is an important determinant of the

success of development programs. Scholars, too, use the indicators in their

empirical research on the causes and consequences of good governance.

The WGI show that governance can in fact be measured systematically

across countries. And this evidence-based approach yields important insights.

Good governance is not the exclusive preserve of rich countriesin

fact over a dozen developing and emerging countries including Slovenia,

Chile, Botswana, Estonia, Uruguay, Czech Republic, Hungary, Latvia,

Lithuania, Mauri tius, and Costa Rica have governance scores better

than those of industrialized countries such as Italy or Greece. Significant improvements in governance can and do occur even over the

relatively short per iod of a decade. In fact nearly one-third of countr ies

in the WGI show a significant change in at least one of the six aggregate

indicators between 1998 and 2008, roughly equally divided between

improvements and declines.

Notions of Afropessimism regarding governance are misplaced,

with several countries in Africa showing significant improvements in

governance over the past decade, including Ghana, Liberia, Rwanda,

Angola, Ethiopia, and the Democratic Republic of Congo, although

often from a very low base.

If you cannot measure it, Lord Kelvin famously remarked, you cannot

improve it. By supplying the tools to measure governance and monitorchanges in its quality, the WGI have helped to reshape the framework in

which governance reforms are designed, implemented, and assessed.

Control of Corruptionselected countries, 2008

0

MYANMAR

TURKMENISTAN

ZIMBABWE

VENEZUELA

KENYA

CHINA

INDIA

MEXICO

GREECE

ITALY

SOUTHAFRICA

SOUTHKOREA

HUNGARY

ESTONIA

BOTSWANA

URUGUAY

CHILE

FRANCE

UNITEDSTATES

NEWZ

EALAND

DENMARK

Margins of Error

2.5

-2.5

Governance Level

OOD

ANCE

POOR

RNACE

THE WORLDWIDE GOVERNANCE INDICATORS ARE A RESEARCH PROJECT CARRIED OUT BY DANIEL KAUFMANN OF THE BROOKINGS INSTITUTIO

MASSIMO MASTRUZZI OF THE WORLD BANK INSTITUTE AND AART KRA AY OF THE DEVELOPMENT RESEARCH GROUP OF THE WORLD BANK. TWGI DO NOT REFLECT THE OFFICIAL VIEWS OF THE WORLD BANK, ITS EXECUTIVE DIRECTORS, OR THE COUNTRIES THEY REPRESENT. THE WG

ARE ALSO NOT USED BY THE WORLD BANK FOR RESOURCE ALLOCATION PURPOSES.

The WGI are now well established as one of the standard sets of measures that any researcher or policy analyst must

consult, says Simon Johnson, the Ronald A. Kurtz Professor of Entrepreneurship at the Sloan School of

Management at MIT, and former Chief Economist of the International Monetary Fund.